What T-Mobile's unsubsidized iPhone means for you

Although customers will pay higher upfront costs, they'll actually save hundreds over the course of their contract

Ever since AT&T walked away from a deal to acquire T-Mobile last year, T-Mobile has been struggling to define itself and win over customers — and it hasn't helped that its lineup did not include the iPhone. But that's about to change: Speaking at the Deutsche Telekom's analyst conference this week, T-Mobile CEO John Legere revealed a long-anticipated deal with Apple that suggests it'll finally bring the iPhone to the fourth-place carrier, as well as a dramatic new pricing structure that does away with traditional phone contracts.

First some background: Most phone carriers sell their devices using subsidies. Customers pay attractively low upfront costs for the phone itself, then cough up relatively high monthly fees to pay for voice, text, and data service. "Basically you're paying a mortgage on your phone," says Kevin Fitchard at GigaOm. T-Mobile's new "Value Plan" flips this traditional pricing structure on its head: T-Mobile customers will pay a steeper price ($650 to $850) for an unsubsidized iPhone 5 rather than the $200 subsidized price available through AT&T or Verizon. In exchange, T-Mobile customers will pay a much lower monthly fee over the course of their two-year contract, saving them a healthy chunk of change in the long run — up to $1,000 dollars during a two-year span.

Of course, convincing customers to take the initial plunge may not be easy. That said, T-Mobile already offers an optional version of this proposed Value Plan that accounted for 80 percent of its activations last year. But now it's shifting to the unsubsidized model entirely and — the really big news — applying it to the iPhone. Or nearly entirely: T-Mobile is also kicking around the idea of a financing plan for an unsubsidized phone. After a down-payment of $100, for example, consumers pay for the device over a 20-month stretch. In terms of monthly costs, this option wouldn't differ much from traditional contracts.

What advantage does this Value Plan offer new customers? Other carriers like Verizon are using subsidies to strong-arm consumers into its confusing new shared data plans; T-Mobile appears to be positioning itself as the no-nonsense carrier with clear, easier-to-understand contracts, at least relatively speaking.

Another advantage is that customers who don't want a top-of-the-line device — or who can snag an unlocked iPhone or top-shelf Android for cheap elsewhere — should be able to sign up for T-Mobile's contract with their existing unlocked device, subverting expensive upfront costs while giving them more flexibility. (Obviously, T-Mobile would rather you paid the high unsubsidized price, but remember: Its priority is snaring new customers, at least for now.)

One last thing: Countries in Europe already use T-Mobile's unsubsidized model. Perhaps if U.S. customers find the service's Value Plan attractive, AT&T, Verizon, and Sprint will take note.

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Is President Obama going to war against legalized pot?

The leader of the now-immortal Choom Gang is reportedly on the verge of becoming the buzzkiller-in-chief

Oh, the Choomanity! President Obama, the nation's most famous former pot smoker, is reportedly considering taking legal action against Colorado and Washington that could overturn the states' new marijuana legalization laws. The new state rules, which allow those over 21 to possess up to an ounce of pot, are on a collision course with the Controlled Substances Act, the federal statute that outlaws marijuana use. Ever since the state laws were passed by popular vote on Election Day, the White House and the Justice Department have been "holding high-level meetings" to figure out a response, says Charlie Savage at The New York Times:

One option is to sue the states on the grounds that any effort to regulate marijuana is pre-empted by federal law. Should the Justice Department prevail, it would raise the possibility of striking down the entire initiatives on the theory that voters would not have approved legalizing the drug without tight regulations and licensing similar to controls on hard alcohol.

The irony of the situation is almost too cruel to fathom. The leader of the now-immortal Choom Gang — who in his youth smoked "sweet-sticky Hawaiian buds," hot-boxed his car so thoroughly that he could take "roof hits," and coined the joint-snatching term "Intercepted!" — is now on the verge of becoming the buzzkiller-in-chief. And the timing of the Times report couldn't be worse, coming only a day after Washington's new marijuana law went into effect. The bongs had only just come out of the shadows, and pot aficionados were still high on the the sweet smell of freedom, when President Obummer entered the picture.

Of course, it's not just Obama's image as a pretty chill guy that would suffer. He could end up paying a heavy political price for cracking down on pot. "Such a response would raise political complications for President Obama because marijuana legalization is popular among liberal Democrats who just turned out to re-elect him," says Savage.

Supporters of the state laws also say a crackdown would be plain foolish. On a policy level, these new rules are tools to raise badly needed revenue and tackle the so-called War on Drugs from a different angle, says Tim Dickinson at Rolling Stone:

The new laws also compel Colorado and Washington to license private businesses to cultivate and sell pot, and to levy taxes on the proceeds. Together, the two states expect to reap some $600 million annually in marijuana revenues for schools, roads, and other projects. The only losers, in fact, will be the Mexican drug lords, who currently supply as much as two-thirds of America's pot.
In the end, though, the controversy comes down to an unavoidable conflict between state and federal laws. An easy (if unlikely) way to resolve the dilemma would be to legalize marijuana across the country. Naturally, there's already a White House petition for that.

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Today in business: 5 things you need to know

1. JOB GROWTH BRINGS UNEMPLOYMENT TO FOUR-YEAR LOW
The economy added 146,000 non-farm jobs in November, pushing the unemployment down from 7.9 percent to 7.7 percent, the lowest it's been in four years. Last month's job gains were far better than expected — economists had predicted a rather meager gain of just 93,000 jobs — partly because Hurricane Sandy didn't slow down hiring in the Northeast as much as feared. The news buoyed stocks, but just a bit, as the Labor Department shaved 33,000 off its previous estimate of October's job growth, bringing it down to 138,000. Also, some of the decrease in the unemployment rate stemmed from the fact that more people gave up looking for work. "The labor market is not getting worse," says Jacob Oubina, a senior U.S. economist at RBC Capital Markets in New York, "but is also not getting much better." [Reuters]
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2. CONSUMER BLUES HOLD DOWN STOCKS
Consumer confidence dipped in early December to its lowest point since August, according to a survey released Friday. The consumer pessimism caused major stock indexes to give up early gains they had made thanks to the better-than-expected jobs report. The main reason for the mood swing among consumers appeared to be investor worries over the stalemate in Washington on how to avoid the "fiscal cliff" of economy-busting tax hikes and spending cuts scheduled for Jan. 1. "While it (consumer confidence data) is just one measure of consumer sentiment, maybe the constant barrage of back and forth in D.C. with no resolution yet is having an impact," said Peter Boockvar, managing director at Miller Tabak & Co in New York. [Reuters]
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SEE ALSO: Today in business: 5 things you need to know

3. CONSUMER REPORTS DISPUTES FORD HYBRID MILEAGE
Ford is taking a beating in the latest issue of Consumer Reports, which found that two flagship Ford hybrids fell far short of the mileage they promised. Consumer Reports said that in its tests the Ford Fusion Hybrid delivered only 39 mpg in highway and city driving — Ford promises 47 mpg — and the C-Max Hybrid only got 37 mpg, instead of the 47 mpg Ford claims. The 20 percent difference was the largest for any vehicles the magazine tested. Most others were within 2 mpg. Ford says it "cannot speak" for Consumer Reports' tests, but that other analysts have praised its hybrids, and even found in some cases that they exceeded expectations. [Forbes]
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4. GOOGLE STOPS OFFERING SMALL BUSINESSES FREE APPS
Google says it's phasing out the free version of its Google Apps software suite for small businesses. Existing customers will be able to continue using their accounts without paying, but all new subscribers — big or small — will have to sign up for the Google Apps for Business Premium version, which costs $50 a year per user. The company said in a blog post last year that the service has more than 40 million users, most of whom were believed to be using the free service. Google's main competitor, Microsoft's "Office 365" online service, offers an email service and online versions of Word, PowerPoint, and Excel from $6 per user, per month. [TechCrunch]
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SEE ALSO: Bangladesh's deadly factory fire: Are American retailers to blame?

5. ECONOMISTS PROPOSE $1 TRILLION COINS TO AVOID DEBT-CEILING FIGHT
Another showdown over raising the debt ceiling is looming. Unless Congress raises the limit, the Treasury Department will hit its $16.4 trillion borrowing ceiling by February, and the government will run short of money to pay its bills. If Republicans resist raising the limit, insisting on spending cuts in exchange, the Obama administration has another option, scholars say. It can mint as many coins as it wants, and assign any value it wants. So, the theory goes, it could have the U.S. Mint make two $1 trillion platinum coins, move them through the Federal Reserve to Treasury's accounts, and — voila — the administration suddenly has the money it needs for two more years with no more borrowing. "I like it," Joseph Gagnon of the Peterson Institute for International Economics tells The Washington Post. "There's nothing that's obviously economically problematic about it."

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